SAN FRANCISCO -- Yahoo's revenue declined for the fourth straight quarter, walloped by declining online display advertising sales.
Shares fell nearly 4% to $36.77 in after-hours trading.
Yahoo reported $1.2 billion in net revenue in the fourth quarter, down from $1.22 billion a year ago.
The results continued the lackluster record of the troubled Internet company under former Google executive Marissa Mayer, who was supposed to be its salvation.
Yet Mayer still has time to turn things around. Shares of Yahoo have nearly doubled over the past year.
The reason? The rising value of Chinese ecommerce giant Alibaba, in which Yahoo owns a 24% stake. Alibaba is expected to hold an initial public offering this year. Many investors own Yahoo shares as a proxy for the IPO and immediately started scanning for Alibaba's performance in Yahoo's fourth-quarter results.
"Everyone owns Yahoo to own Alibaba," said BGC Partners analyst Colin Gillis. "She is very fortunate to have the treasure trove of Alibaba."
As a result, Mayer probably will get "another couple of quarters of hall passes" despite her failure to grow advertising revenue and growing uncertainty about her ability to turn around Yahoo, Gillis said.
But, "if some of the air comes out of that balloon, the focus could return back to Yahoo's core business. That's when she's going to need to do something," he said.
It almost goes without saying these days that Yahoo's core business isn't faring too well despite Mayer's efforts to get people to spend more time on Yahoo sites and get advertisers to spend more money on them.
Yahoo's advertising business continues to decline even as rivals Google and Facebook post big gains.
Yahoo has lost ground in the U.S. display advertising market to Google and Facebook nearly every year for the last five. Yahoo claimed 5.8% of that market in 2013, down from 6.8% in 2012, according to research firm EMarketer.
Yahoo said that revenue from display ads fell 6% year-over-year, while the price per ad, excluding Korea, fell 7%.
Under Mayer, Yahoo is making moves. It has bought more than two dozen startups to bring in new talent and ideas to the aging company.
The downside: "destruction of capital," Gillis said.
The company has $5 billion in cash, cash equivalents, and investments in marketable securities.
Adding to that destruction and growing collective dismay among investors: her firing of chief operating officer Henrique de Castro, who departed Yahoo with a very rich severance package, taking a big bite out of Yahoo's cash reserves.
Yahoo's profit did rise to $348.2 million, or 33 cents a share, from $272.3 million, or 23 cents per share, a year ago.